What are the New Grants for Export Market Development and How Can You Apply?
The Export Market Development Grant (EMDG) is a welcome boost for businesses that are planning to develop exports. The scheme gives cash rebates to individuals, firms, joint ventures, or partnerships with a gross turnover of under $50 million. For individuals and companies to qualify for grant payments of up to $150,000 and $250,000, respectively, they should spend at least $15,000 on export promotion within two years.
Who Can Apply for EMDG?
Any Australian citizen or company exporting Australian services, goods, or intellectual property that meet the following requirements can apply for the Export Market Development Grant:
- Turnover of less than $20 million (applies to turnover before the financial year upon lodging the EMDG application)
- Has an Australian Business Number
- The individual has a principal place of residence in Australia
- A partnership formed and operating under an Australian State or Territory law and has at least half of the partners are defined as Australian persons
- Trustees should have each trustee as an Australian person
EMDG funds are strictly for promotional activities and, therefore, should only be used when marketing eligible products (see below for the list) to foreign countries. Training for marketing skills development is covered, as well. Only products of substantially Australian origin can qualify for the use of EMDG funds.
Many expenditures are covered, therefore broadening the number of people and businesses that can successfully qualify for the grant. These include:
- Overseas travel
- Promotion expenses over various social media platforms
- Costs incurred for advertising and publicity services
- Product samples
- Communication charges
- Sales and distribution agents for overseas transactions
- Payments for overseas sales offices
- Market research
- Cost of hiring consultants
- Incentives provided for overseas customers
After reviewing the initial grant program, Austrade consulted with stakeholders to design a better and more streamlined version of the grant. As a result, the original EMDG scheme was scrapped on 30 June 2022, which was then effectively replaced by the new program that started on 1 July 2021. The scheme now has an additional $80 million in funding, which will be distributed during the life of the program.
The new guidelines for EMDG were introduced to substantially increase opportunities for all company types, which now include subsidiaries of foreign establishments. Previously, several companies in the intellectual property and service industry found it challenging to receive an export grant when marketing overseas. The difficulty mainly occurred with the unclear definition of the scheme. Some had to rely on the Courts’ interpretation to determine whether they qualified for the grant.
Thanks to the broadened scope of the scheme, individuals and companies that were not able to claim their EMDG incentives successfully may qualify for export grants.
Under the new guidelines, a company manufacturing offshore can continue incurring eligible expenditures when using Australian intellectual property. The spending should focus on promoting the sale of the covered products in foreign marketplaces.
For example, clothing can attract cost rebates for businesses promoting overseas sales, as long as the goods are manufactured offshore. Suppose a foreign licensee takes licence fees or royalties from a marketing activity cost. In that case, the business may be qualified for a rebate, as well.
Types of Grants Available for Exporters
The EMDG scheme has three stages or tiers, each giving various levels of support for businesses to help expand their export markets. The grant duration depends on the tier level, which describes the stage of the exporter’s journey.
For example, if you are already exporting your products or services to other countries, you can skip Tier 1, which covers businesses that are at the beginning of the exportation process.
Tier 1: New Exporters
Qualified businesses or individuals can receive up to $40,000 for up to two financial years each. You or your business may be eligible for Tier 1 grant if you are prepared to export your products or services in the grant year. That means that you:
- do not have any experience in exporting goods before your application
- have marketing skills demonstrated by your use of Austrade’s Export Readiness Tool or that you have completed training with an export readiness representative body or a similar provider
If you have already exported products, you can skip Tier 1 and proceed to Tier 2.
Tier 2: Expanding Export Promotion Activities
You are eligible for this tier grant if you are:
- Currently exporting eligible goods
- Planning to expand export promotions for your eligible products and services
In this tier, the grant is up to $80,000 per financial year for up to three years. The key here is to show that you are expanding your marketing activities, which should be evident in the required documentation described as your plan to market. This plan can be a one-page statement, your promotional strategic roadmap, or any related internal planning document. Your plan to market should contain an explanation of the following:
- The business goals that you wish to achieve through your marketing strategy
- Your method of measuring the progress and success of your promotional activities
- Your budget for marketing for every financial year
- Your target customers or demographic for the promotion
- Your specific promotional activities
All Tier 2 applicants should declare they are exporting eligible goods described above.
Tier 3: Expanding and Strategic Shift in Marketing
Eligible exporters in Tier 3 can get grants of up to $150,000 per financial year for up to three years. Like Tier 2, the grant applicants in Tier 3 should declare that they are exporting eligible products with their plan to market.
A strategic shift pertains to a change in direction regarding your new target market, which can be a new country or a different market in a much bigger country, such as the United States. For example, you have been exporting goods to the US East Coast and now want to move or add the West Coast to your export locations.
Your strategic shift may also be regarding your business shifting to another specific market segment, perhaps due to a modification in your business goals. You may be launching a new product or service, or you wish to engage with your customers through e-commerce.
Whatever your reason for expanding and shifting in marketing, your plan to market should contain a high-level explanation, particularly about your promotional activities and how they can help you get to your new strategy.
Small to medium enterprises (SMEs) can apply for grants for a total of eight years. This eight-year cap does not have to be consecutive. Therefore, businesses and individuals can apply for a specific grant at any stage based on what their company requires.
How to Apply for the Grant
Applications opened at 9 AM AEST on 6 July 2022. Hurry and lodge your application by 4 PM AEST on Wednesday, 17 August 2022. Remember that Austrade will not accept late applications, so make sure that you complete and submit your application online with the required documents within the specified period.
Deciding on the grant amount can be a little complicated. The key is to remember the minimum spend requirement. It helps if the amount is at least equal to your own money when spending for eligible expenses.
Pre-planning is the best way to claim an export grant successfully. To make the process easier for you, you can hire an approved EMDG consultant to assist you in lodging a claim on your behalf. Consult with Origin early in your export process so you can ensure that you can claim your grant successfully. Contact us today to learn how we can be of assistance.